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PERFORMANCE & SAFETY INCENTIVE AWARD PROGRAM

1.0     PURPOSE

1.1.      The purpose of this Performance and Safety Incentive Award Program (hereinafter “Incentive Program”) is to encourage exceptional performance by the Subcontractor in the execution of the work that provides a quality product, safely, in a timely manner, and minimizing wasted management efforts from both the Subcontractor and LBNL in the execution of the Subcontract.

1.2.      LBNL reserves the right to unilaterally terminate this program in whole or, from time to time, in part if LBNL determines that termination of the program is in LBNL’s interest regardless of the current progress or state of the work.

2.0     ORGANIZATION

2.1.      The Incentive Program (for small/moderate sized construction subcontracts) will be conducted utilizing the following organization:

2.2.      Fee Determination Official (FDO):

2.2.1.      Design & Construction Management Head (DCMH)     Stan Tuholski

2.3.      Performance Monitors

2.3.1.      Project Manager (PM)                                          [LBNL PM Name]

2.3.2.      Construction Manager (CM)                                  [LBNL CM Name]

2.3.3.      Safety Engineer (SE)                                [LBNL Safety Eng Name]

3.0     FEE DETERMINATION OFFICIAL (FDO)

3.1.      The FDO will be the DCMH. The responsibilities of the FDO include:

3.1.1.      Considering the report from the Performance Monitors (as compiled and presented by the PM) for each evaluation period after discussion with the CM and SE and, if appropriate, with others such as the Subcontractor;

3.1.2.      Determining the amount of incentive award earned and payable for each evaluation period. The FDO must ensure that the amount and percentage of incentive award earned accurately reflects the Subcontractor’s performance. Any variances between the Performance Monitors’ recommendation and FDO determination must be justified and documented in the official Subcontract file.

4.0      PERFORMANCE MONITORS (Monitors)

4.1.      The purpose of the PEB is to evaluate the Subcontractor’s overall performance for the incentive program evaluation period which leads to a recommended incentive award amount to the FDO and to evaluate and recommend changes to the incentive program as appropriate to the FDO. The Monitors responsibilities include:

4.1.1.      Conducting ongoing evaluations of Subcontractor performance based upon the Incentives Matrix and such additional performance information as may be obtained from the Subcontractor and other sources. It is important that the  Monitors  evaluate  a  Subcontractor’s  performance  according  to  the standards and criteria stated in the Incentives Matrix;

4.1.2.      Submitting a report to the FDO covering the collective Monitor's findings and recommendations for each evaluation period.

4.2.      Monitors provide the continuous evaluation of the Subcontractor’s performance in specific assigned areas of responsibility. This often (daily) oversight is the foundation of the incentive program evaluation process. Monitors are specialists intimately familiar with their assigned areas of cognizance; their monitoring duties generally are in addition to, or an extension of, their regular responsibilities. In performing their duties, monitors should: maintain ongoing communication with their Subcontractor counterparts, conduct assessments in an open, objective and cooperative spirit, and emphasize negative performance as readily as positive performance. Monitors are responsible for:

4.2.1.      Monitoring (not directing), evaluating and assessing Subcontractor performance in their assigned areas. This activity is conducted according to Subcontract requirements and the incentives matrix so that evaluations are fair and accurate, periodically preparing a report for the FDO.

4.3.      The following questions should be considered by performance monitors in preparing their reports. These questions can prove helpful in assuring that the evaluation data are complete and pertinent and accurately assess how well the Subcontractor performed in the monitors' respective assigned areas during the period.

4.3.1.      What (in the monitor's area) was the Subcontractor supposed to accomplish during the period? What was actually accomplished?

4.3.2.      How critical are the efforts accomplished, or not accomplished, by the Subcontractor?

4.3.3.      What was the impact of any efforts completed early or late? How critical was the time frame involved?

4.3.4.      How well did the Subcontractor perform the tasks that were accomplished?

4.3.5.      What are the major strengths and weaknesses (in sufficient detail to discuss with the Subcontractor)?

4.3.6.      Were any LBNL-directed changes made or did any obstacles arise which impacted performance? What corrective actions were implemented? How effective were they?

4.3.7.      Has the Subcontractor efficiently and effectively used available resources (e.g., personnel and facilities) to improve its performance (including cost control)?

4.3.8.      Has the Subcontractor's performance been clearly assessed in regard to all tasks and specific objectives?

5.0     STEPS IN THE EVALUATION PROCESS

The sequence of events leading to an incentive award determination are as follows:

5.1.      During the course of the evaluation period, monitors track Subcontractor performance. Interim (mid-term) evaluations are encouraged (as  appropriate)  to identify strengths and weaknesses in the Subcontractor’s performance during the period being evaluated.

5.2.      At the end of the period, the monitors assess the Subcontractor's performance and report to the FDO.

5.3.      The FDO considers the monitors' reports and any other pertinent information and determines the amount of incentive award for the period.

6.0     AWARD FEE RATING TABLE

6.1. The following rating table is to be used for all construction subcontracts containing incentive awards. It includes adjectival ratings as well as a numerical scoring system of 0-100. Earned incentive award (or interim incentive award amounts in the case of interim evaluations) is calculated by applying the total numerical score to the incentive award pool. For example, a numerical score of 85 yields an incentive award of 85 percent of the incentive award pool for that evaluation period. For exceptions see 8.0, Zero Score for Poor Performance. The table below lists the incentive award evaluation adjectival ratings with their corresponding score ranges. In addition, a narrative description is also provided to assist the PEB in applying the ratings. Criteria for evaluation factors and subfactors should reflect the table.

7.0     ZERO SCORE FOR POOR PERFORMANCE

7.1. No fee will be paid when the total evaluation score is less than 50. In addition, any factor that receives a score of less than 50 for "poor/unsatisfactory" performance will not be rewarded and shall be converted to a factor score of zero. Such zeroing-out should not be done at the subfactor level.

8.0     TIMELINESS AND INCENTIVE AWARD DISTRIBUTION

8.1.      The timeliness of incentive award evaluations is critical. Long delays will minimize any benefits realized from periodic evaluations and reports. Unless evaluation results are transmitted to the Subcontractor in a timely manner, and any incentive award payments promptly made, these results and payments may not have the desired influence upon the Subcontractor's performance during the follow-on evaluation period. For that reason, all final and interim incentive award ratings will be provided to the Subcontractor within 45 calendar days after the end of the period being evaluated. Any fee payments due the Subcontractor will be paid no later than 60 calendar days after the end of the evaluation period to which they apply.

8.2.      Incentive award distribution is to be distributed as follows:

8.2.1.      50% is to be retained by the Subcontractor; and

8.2.2.      50% is to be used for a construction worker safety program to provide incentives directly to the workers for exemplary safety work practices. This construction worker safety program is to be proposed by the Subcontractor and agreed to in advance of the work by the Subcontractor and the University.

9.0      DOCUMENTATION

9.1. The reporting formats used by monitors should be structured to ensure clarity and conciseness. Where possible, several evaluation parameters may be consolidated in a single format. Consistency can be achieved by using the same general format for all closely related work at a given activity. However, caution is required here. Carefully tailored evaluation plans can be compromised by inflexible and ill- conceived rating formats. Any format adopted should provide a place for the monitors to make narrative comments. These narrative comments provide detailed, pertinent information not addressed in the completed format. For example, they cover the circumstances under which reported performance levels were achieved, especially if these circumstances were abnormal in any way. These comments also discuss the Subcontractor's efficiency in managing assigned personnel and other resources. Enough detail should be included in reports to the FDO to ensure that their findings and recommendations are accurate and fair and can be supported.

10.0   PURPOSE

10.1.    The purpose of this Performance and Safety Incentive Award Program (hereinafter “Incentive Program”) is to encourage exceptional performance by the Subcontractor in the execution of the work that provides a quality product, safely, in a timely manner, and minimizing wasted management efforts from both the Subcontractor and LBNL in the execution of the Subcontract.

10.2.    LBNL reserves the right to unilaterally terminate this program in whole or, from time to time, in part if LBNL determines that termination of the program is in LBNL’s interest regardless of the current progress or state of the work.

11.0   ORGANIZATION

11.1.    The Incentive Program will be conducted utilizing the following organization:

11.2.    Fee Determination Official (FDO):

11.2.1.   Facilities Division Chair        Reva Nickelson

11.3.    Performance Evaluation Board (PEB):

11.3.1.   Project Director        [PD Name], PEB Chair

11.3.2.   Procurement Lead                [Buyer Name]

11.3.3.   User Representative        [User Rep Name]

11.4.    Performance Monitors (PMs)

11.4.1.   Project Manager              [LBNL PM Name]

11.4.2.   Construction Manager     [LBNL CM Name]

11.4.3.   Safety Engineer    [LBNL Safety Eng Name]

12.0   FEE DETERMINATION OFFICIAL (FDO)

12.1.    The FDO will be the Facilities Division Director. The responsibilities of the FDO include:

12.1.1.   Considering the PEB Report (PEBR) for each evaluation period and discussing it with the PEB Chair and, if appropriate, with others such as the Subcontractor;

12.1.2.   Determining the amount of incentive award earned and payable for each evaluation period. The FDO must ensure that the amount and percentage of incentive award earned accurately reflects the Subcontractor’s performance. Any variances between the PEB recommendation and FDO determination must be justified and documented in the official Subcontract file.

13.0   PERFORMANCE EVALUATION BOARD (PEB)

13.1.    The purpose of the PEB is to evaluate the Subcontractor’s overall performance for the incentive program evaluation period which leads to a recommended incentive award amount to the FDO and to evaluate and recommend changes to the incentive program as appropriate to the FDO. The PEB responsibilities include:

13.1.1.   Conducting ongoing evaluations of Subcontractor performance based upon the Incentives Matrix and such additional performance information as may be obtained from the Subcontractor and other sources. It is important that the PEB evaluate a Subcontractor’s performance according to the standards and criteria stated in the Incentives Matrix

13.1.2.   Submitting a PEB Report (PEBR) to the FDO covering the Board's findings and recommendations for each evaluation period

13.1.3.   Recommending appropriate changes to the Incentive Program for approval by the FDO

13.2.    The official responsible for appointing PEB members should designate one as the PEB Chair. The functions of a PEB Chair include:

13.2.1.   Calling PEB meetings, controlling attendance and chairing the meetings;

13.2.2.   Recommending the appointment of nonvoting members to assist the PEB in performing its functions, e.g., a recording secretary;

13.2.3.   Appointing monitors for the Subcontract effort and assuring they are provided appropriate instructions and guidance;

13.2.4.   Requesting and obtaining performance information from other units or personnel involved in observing Subcontractor performance, as appropriate;

13.2.5.   Calling on personnel from various organizational units to consult, as needed, with the PEB;

13.2.6.   Assuming responsibility for the actual preparation and approval of the PEBR and other documentation such as Board minutes; and

13.2.7.   Ensuring the timeliness of incentive award evaluations.

14.0   PERFORMANCE MONITORS

14.1.    Monitors provide the continuous evaluation of the Subcontractor’s performance in specific assigned areas of responsibility. This often (daily) oversight is the foundation of the incentive program evaluation process. Performance monitors are specialists intimately familiar with their assigned areas of cognizance; their monitoring duties generally are in addition to, or an extension  of, their regular responsibilities. In performing their duties, monitors should: maintain ongoing communication with their Subcontractor counterparts, conduct assessments in an open, objective and cooperative spirit, and emphasize negative performance as readily as positive performance. Monitors are designated by the PEB Chair and are responsible for:

14.1.1.   Monitoring (not directing), evaluating and assessing Subcontractor performance in their assigned areas. This activity is conducted according to Subcontract requirements and the incentives matrix so that evaluations are fair and accurate, periodically preparing a Performance Monitor Report (PMR) for the PEB and, if necessary, providing verbal presentations as well; and

14.1.2.   Recommending any needed changes in the incentives matrix for consideration by the PEB and the FDO.

14.2.    The following questions should be considered by performance monitors in preparing their PMRs. These questions can prove helpful in assuring that the evaluation data are complete and pertinent and accurately assess how well the Subcontractor performed in the monitors' respective assigned areas during the period.

14.2.1.   What (in the monitor's area) was the Subcontractor supposed to accomplish during the period? What was actually accomplished?

14.2.2.   How critical are the efforts accomplished, or not accomplished, by the Subcontractor?

14.2.3.   What was the impact of any efforts completed early or late? How critical was the time frame involved?

14.2.4.   How well did the Subcontractor perform the tasks that were accomplished?

14.2.5.   What are the major strengths and weaknesses (in sufficient detail to discuss with the Subcontractor)?

14.2.6.   Were any LBNL-directed changes made or did any obstacles arise which impacted performance? What corrective actions were implemented? How effective were they?

14.2.7.   Has the Subcontractor efficiently and effectively used available resources (e.g., personnel and facilities) to improve its performance (including cost control)?

14.2.8.   Has the Subcontractor's performance been clearly assessed in regard to all tasks and specific objectives?

15.0   STEPS IN THE EVALUATION PROCESS

The sequence of events leading to an incentive award determination are as follows:

15.1.    At the start of a new period, the Subcontractor is provided with any changes to the performance evaluation plan.

15.2.    The PEB may determine that it wants to highlight to the Subcontractor a performance area that it should pay particular emphasis to during the period. For instance, an area of performance during the period may be of particular risk to the program. The PEB may want to focus the Subcontractor’s attention on this area of risk by highlighting it. This would be accomplished by issuing a "letter of emphasis" to the Subcontractor a certain number of days prior to the start of the evaluation period, as specified in the incentive plan.

15.3.    During the course of the evaluation period, performance monitors track Subcontractor performance. Interim (mid-term) evaluations are encouraged to identify strengths and weaknesses in the Subcontractor’s performance during the period being evaluated. Interim evaluations are documented in narrative or briefing format and should involve the FDO.

15.4.    At the end of the period, the performance monitors assess the Subcontractor's performance and report to the PEB.

15.5.    The PEB considers the performance monitors' reports and any other pertinent information, including information provided by the Subcontractor during the evaluation period, and prepares a report for the FDO with findings and recommendations.

15.6.    The Subcontractor is provided an opportunity to comment on its performance during the evaluation period using one, or a combination of one or more, of the following methods:

15.6.1.   The Subcontractor may provide a written or oral self-assessment  of  its performance to the PEB to be considered by it in preparing its findings and recommendations.

15.6.2.   The Subcontractor is provided a copy of the draft findings and recommendations and may be afforded an opportunity to identify factual errors. Any errors identified by the Subcontractor should be addressed by the PEB in its final report. The draft recommendation is not a subject for negotiation; the PEB should not engage in discussions with the Subcontractor.

15.6.3.   The Subcontractor is provided a copy of the final PEB Report at the same time as the PEB submits it to the FDO. Contractor comments are submitted to the FDO for consideration.

16.0   AWARD FEE RATING TABLE

16.1.    The following rating table is to be used for all construction subcontracts containing incentive awards. It includes adjectival ratings as well as a numerical scoring system of 0-100. Earned incentive award (or interim forecast of incentive award amounts in the case of interim evaluations) is calculated by applying the total numerical score to the incentive award pool. For example, a numerical score of 85 yields a recommended incentive award of 85 percent of the incentive award pool for that evaluation period. The table below lists the incentive award evaluation adjectival ratings with their corresponding score ranges. In addition, a narrative description is also provided to assist the PEB in applying the ratings. Criteria for evaluation factors and subfactors should reflect the table.

16.2.    The FDO shall review the recommended award by the PEB and the Subcontractor input and make a final determination of the incentive award that will be earned. This determination is not negotiable. The FDO will also make a decision as to whether the unearned amount of the incentive award will be rolled over to a future evaluation period.

17.0   ZERO SCORE FOR POOR PERFORMANCE

17.1. No fee will be paid when the total evaluation score is less than 61. In addition, any factor that receives a score of less than 61 for "poor/unsatisfactory" performance shall be converted to a factor score of zero.

18.0   CONTRACTOR INPUT

18.1.    The Subcontractor should be provided an opportunity to furnish a self-assessment of its performance. Once the PEB report is prepared, the Board may allow the Subcontractor to comment on the draft report. Contractor participation at this point ensures that all pertinent data was considered and no errors of fact were used as a basis for decisions. Such communications, however, must not result in negotiation of incentive award ratings. The ratings should be fair and reasonable, but are ultimately a unilateral LBNL determination.

18.2.    Throughout the period of performance, the Subcontractor should be encouraged to submit suggestions for improving or changing the evaluation process. In addition to the various formal communications channels, both parties should recognize that frequent, less formal discussions are valuable in ensuring ultimate program success. Both LBNL and the Subcontractor should collaborate to eliminate any unnecessary contractual, organizational or conceptual barriers that constrain information sharing and other communications needed for successful joint problem solving.

19.0   TIMELINESS AND INCENTIVE AWARD DISTRIBUTION

19.1.    The timeliness of incentive award evaluations is critical. Long delays will minimize any benefits realized from periodic evaluations and reports. Unless evaluation results are transmitted to the Subcontractor in a timely manner, and any incentive award payments promptly made, these results and payments may not have the desired influence upon the Subcontractor's performance during the follow-on evaluation period. For that reason, all final and interim incentive award ratings will be provided to the Subcontractor within 45 calendar days after the end of the period being evaluated. Any fee payments due the Subcontractor will be paid no later than 60 calendar days after the end of the evaluation period to which they apply.

19.2.    The timeliness of changes in the evaluation plan is also important. Proposed changes should be processed expeditiously and the Subcontractor notified in advance of the evaluation period to which they apply.

19.3.    Incentive award distribution:

19.3.1.   During the design phase evaluation periods (1 and 2), the Subcontractor may retain all of the incentive awarded.

19.3.2.   During the construction phase evaluation periods (3 through 6), 60% of the incentive award is to be paid out to the lower-tier subcontractors based on the percentage of work accomplished during that incentive period; 30% is to be retained by the Subcontractor; and the remaining 10% is to be used for a construction worker safety program to provide incentives directly to the workers for exemplary safety work practices. This construction worker safety program is to be proposed by the Subcontractor and agreed to in advance of the work by the Subcontractor and the University.

20.0   DOCUMENTATION

20.1. The reporting formats used by monitors should be structured to ensure clarity and conciseness. Where possible, several evaluation parameters may be consolidated in a single format. Consistency can be achieved by using the same general format for all closely related work at a given activity. However, caution is required here. Carefully tailored evaluation plans can be compromised by inflexible and ill- conceived rating formats. Any format adopted should provide a place for the monitors to make narrative comments. These narrative comments provide detailed, pertinent information not addressed in the completed format. For example, they cover the circumstances under which reported performance levels were achieved, especially if these circumstances were abnormal in any way. These comments also discuss the Subcontractor's efficiency in managing assigned personnel and other resources. Enough detail should be included in reports to the PEB to ensure that their findings and recommendations are accurate and fair and can be supported to the FDO.